Fifty countries, including Bangladesh, have signed an Article of Association (AoA) on 29th June 2015 in order to formally establish the existence of a new international financial institution named Asian Infrastructural Investment Bank (AIIB). In the AIIB, Bangladesh is a founding member, a position and a status that Bangladesh could have never imagined to hold in Western dominated financial institutions like World Bank (WB), Asian Development Bank (ADB) and International Monetary Fund (IMF). Many economists have been debating over the fact that whether the AIIB would be a challenge to the Western dominated WB and ADB or would its role be a complementary to those of the Western financial institutions.
Setting-up of the AIIB
The declaration of setting up the AIIB came from Chinese President Xi Jinping just before the APEC Summit in 2013. Later, twenty one Asian countries, including Bangladesh, have signed a Memorandum of Understanding (MoU) on 24th October, 2014 in order to set up the AIIB. During the signing of the MoU, it was expected that the prospective-founding-members of the Bank would sign an AoA and would also ratify it in their respective national Parliament in order to formally set up the Bank by the end of 2015. Through these procedures, the Bank was supposed to be formally established. Finally, in this June, 50 countries signed the AoA, the legal framework that made the AIIB come into existence.
The U.S. opposed
From the beginning, the U.S. and Japan had been opposing the establishment of AIIB. Through WB, ADB and IMF, the U.S. has been dominating the global economic system since the end of the Second World War, and this dominance remained unchallenged since the end of the cold war. The U.S. and its Asian ally, Japan, were afraid that the impact of the establishment of AIIB would not be limited to mere cut in the U.S.’s dominance on global economic system, but may extend as far as diminishing the dominance as a whole. That is why, the U.S. politicians and diplomats spent too much time on lobbying with its allies to restrain them from joining the AIIB. But the allies, one after the other, have largely failed the U.S. in this regard by joining the AIIB during this March.
One declaration after the other to join the AIIB
The last day of applying for the AIIB’s membership as a founding member was 31st March, 2015. All countries, including the U.S. allies, were in pressure internally concerning the approaching of closing-date of the application. Finally, ignoring the request of its all-weather ally, Britain declared its decision to join the AIIB. Many other European countries started to follow Britain. France, Germany and Italy declared their decisions to join the AIIB as founding member in March. Similar declaration also came from the U.S.’s very important ally Australia. In the meantime, many Asian and non-Asian countries, including Russia, Denmark, Iran and South Korea, declared their decisions to join as the founding member of the AIIB. As of mid-2015, a total of 57 countries, including Bangladesh, had been accepted as the prospective-founding-members of the AIIB. On 29th June 2015, through signing of the AoA, 50 out of these 57 prospective-founding-members, including Bangladesh, became the founding-members of the AIIB, and the AIIB formally came into existence. This is a great respect, great achievement and great opportunity for Bangladesh.
Bangladesh and AIIB
Bangladesh is a very potential country in terms of economy. On 1st July, it was claimed that Bangladesh reached the status of lower middle-income country and Bangladesh may reach the status of a middle-income country very soon. But, would this status bring any changes in the position that Bangladesh hold in WB, ADB and IMF? Would Bangladesh, with the status of middle-income country, get the opportunity to play a decision-making role in these financial institutions? Since the countries having the status of middle-income are important contributors of the global economy, these countries would get the opportunity to play decision-making roles in these financial institutions — this is plain as the nose on your face. Unfortunately, the reality is different. The countries having the status of middle-income do not have any role in the decision-making process of the WB, ADB and IMF. In these institutions, even the voting power of China, the second largest economy in the world, is less than the comparatively smaller economies like Belgium, Netherlands and Luxemburg. Considering these realities, it can be said that developing economies like Bangladesh can hardly expect a favourable future in institutions like WB, ADB and IMF.
At the same time, many developing countries in Asia, including Bangladesh, are not satisfied with the conditions attached to the loans from WB, ADB and IMF. It is very tough to fulfil these conditions attached to the loans. These conditions are, in reality, related to the sustainability of the Western geopolitical hegemony. Considering the above circumstance, it seems that the developing countries in Asia, including Bangladesh, needed a new Bank that would genuinely help these developing countries in their developments and that would value these countries in terms of their true economic positions. And, realizing this very reality, China took the initiative to set up the AIIB.
Another important issue is that a growing economy like Bangladesh needs many infrastructural developments. And, it would be easier for Bangladesh to avail loan for its infrastructural development purposes from the Bank (AIIB) where Bangladesh now itself is be a founding-member. At the same time, as a founding-member, Bangladesh would be able to play a role in the decision-making of the AIIB — this would have been unimaginable in WB, ADB and IMF.
Therefore, it was a sensible decision on the part of Bangladesh to join the AIIB. However, it is not enough. Bangladesh should seek to play an active role regarding the future performance of this international financial institution and be proactive always.
Bahauddin Foizee is an international affairs analyst, and writes on Middle Eastern, greater Asia-Pacific & European geopolitics. Also a campaigner for environmental and social awareness, Bahauddin Foizee occasionally writes on environment and refugee issues.